Zomato, a digital-native company specializing in both food delivery and quick commerce, had a significant reason to celebrate. For the first time in its history, the company achieved profitability, recording a remarkable INR 2 crore profit in the initial quarter of this fiscal year.
In FY23, Zomato managed an impressive volume of over 640 million orders, serving an average of 17 million monthly customers. Alongside this resurgence in business following the pandemic’s initial impact, the company also experienced a proportional increase in its demand for computing power.
Fundamentally, Zomato is built as a technology-centric platform, a fact underscored by its substantial investments in information technology. In the fiscal year 2023, Zomato committed INR 386.7 crore to IT-related expenses, reflecting a notable 34% growth compared to the previous financial year. This increase can be largely attributed to heightened platform activity and the incorporation of Blinkit in August 2022. While this rise represents a slower pace compared to the impressive 88% surge in IT spending during the preceding year ending in March 2022, the cumulative technology budget is on track to surpass the $50 million milestone in the current year.
Zomato harnesses the power of artificial intelligence and machine learning to drive advancements on its platform, catering to the needs of various stakeholders such as customers, delivery partners, and restaurants. Among these stakeholders, restaurant partners enjoy significant advantages through fully automated order management systems. These encompass a range of functions including order transmission, order processing, menu synchronization, payment reconciliation, content promotion, marketing tools, and invoice management features.
During the month of June, Zomato introduced a data analytics platform named “Food Trends” to provide its restaurant partners with a data-driven methodology for making decisions regarding dishes, pricing, and locations. Zomato Food Trends effectively processes data from millions of transactions spanning numerous cities across India and is accessible to a wide audience.
Zomato also joined forces with ICICI Bank this year to roll out its very own unified payments interface (UPI) offering named Zomato UPI. This innovative feature enables customers to conveniently settle payments for their orders directly through the app by establishing their unique UPI ID. This streamlines the payment process, eliminating the requirement for redirection to external payment gateways. Moreover, these strategic endeavors accentuate the necessity for enhanced computing power while maintaining a strong emphasis on security protocols.
Technology holds a crucial position in another aspect critical to Zomato: the enlistment of its delivery partners. This process involves leveraging Aadhaar-based verification through Digilocker, thereby strengthening the validation of authenticity and deterring impersonation. Additionally, the company has integrated checks based on application programming interfaces (APIs) to ensure compliance with regulatory licenses. In the pursuit of refining logistical operations, Zomato has taken a step further by installing automated weather stations across select cities, including Delhi-NCR, Bangalore, and Chennai. This initiative enhances rain forecasting accuracy and offers customers improved visibility through the application.
There is a perception that Zomato might face robust competition from the government-supported Open Network for Digital Commerce (ONDC), an open protocol crafted by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce. ONDC’s objective is to unite buyers, sellers, and logistics operators, and it has attracted significant players like PhonePe, Paytm, Meesho, as well as international giants such as Microsoft and Amazon, who have already become part of the platform. Nonetheless, ONDC has not yet managed to significantly impact the landscape of digital native ventures.